Savings Calculator: How Much Interest Can You Earn?

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*To earn the highest interest rate on your Cash App Savings balance, you need to be 18 or older, have a Cash App Card, and direct deposit at least $300 monthly into Cash App. Cash App will pass through a portion of the interest paid on your savings balance held in an account for the benefit of Cash App customers at Wells Fargo Bank, N.A., Member FDIC

**Prepaid debits cards issued by Sutton Bank, Member FDIC.

By using our savings calculator, you can determine how much you can save over time. Try different deposit amounts, monthly contributions, interest rates and timelines to find out how you can reach your savings goals.

How Is Interest on My Savings Calculated?

A major benefit of keeping money in a savings account is that your funds earn interest. Instead of earning simple interest, however, your money usually earns compound interest. That means that as your balance earns interest, the interest is factored into future earnings. As your balance grows, you earn more and more interest.

Why Does Compounding Frequency Matter?

Depending on the savings account you have, interest might compound daily, monthly or even quarterly. The more frequently interest compounds, the more opportunities to earn interest and the higher your balance can grow in the long run. 
If you want to maximize the interest you earn, look for a high-yield savings account that compounds interest daily.

How to Use a Savings Calculator

A savings interest calculator lets you easily calculate interest on a savings account. To use our calculator, you’ll have to input the following details:

• Initial Deposit: This is the amount you will put into the savings account at the start.
• Regular Contributions: It’s a good idea to regularly add funds to your savings. This is the amount you plan to deposit each time. 
• Contribution Frequency: This is how often you plan to add the chosen amount to your account.
• Years for Growth: This is the number of years that you plan to save for.
• Interest Rate: Input the annual percentage yield, or APY, of the account. This is the rate of return after one year of compounding interest. The higher the APY, the more interest you can earn.
• Compounding Frequency: Select how often the account compounds interest. If you’re not easily able to find this on the web page associated with the account, look for this information in the bank account disclosures. 

Even if you’re not sure how much you will deposit initially or the amount you can contribute each year, try inputting different numbers into the calculator fields to see how they affect your earnings. 

If you’re considering specific savings accounts, see how their respective APYs will impact the amount of interest you earn. Or if you’re planning to save for a specific purchase like a house, car or vacation, see how long you’ll have to keep saving before you have enough set aside.

What Difference Does a Higher Interest Rate Make?

The higher the interest rate on a savings account, the more you can earn on your savings. Consider a savings account that offers 0.50% APY, with interest compounding monthly. If you deposit $1,000 into that savings account, contribute $25 a month and save for a year, you will have about $1,305 in that account at the end of the year.

Now, consider a savings account that pays 4.00% APY with the same compounding frequency. If you start with the same deposit amount and contribute the same $25 each month, your balance will be about $1,346 at the end of the year.

That $41 difference might not seem like much, but think about how the higher interest rate would affect a larger deposit, or how it would increase your savings over a longer period of time. 

Savings account interest rates are variable, which means that they change as market conditions change. So an account that pays 4.00% APY now could pay 3.50% a year from now. But no matter what current APYs are, you’ll benefit from keeping extra funds in a high-yield savings account and earning interest rather than letting them sit in a checking account.

How Much Should I Save Each Month?

The amount you save each month will depend on a few factors, including your income, lifestyle, debt and savings goals. First, you should consider your monthly expenses like rent or mortgage payments, groceries, car payments, utility bills and any other recurring costs. If you have student loans or credit card debt, you should factor in those payments as well. 

Whether you can comfortably save $5 or hundreds a month, it’s a good idea to set aside what you can in order to build up your emergency savings or save toward a specific goal. An easy way to do this is to set up direct deposit for your paychecks or other income, and send a percentage of each paycheck directly to a savings account. That way, you’re automatically setting aside money without having to think about it. 

Building a savings habit is valuable in the long run, especially when you think about how much your balance can grow over the course of years because of compounding. 

Do Any Other Savings Options Offer Higher Interest Rates?

A high-yield savings account is an all-around great option for many savers, but depending on your financial situation and savings goals, you may want to consider a different type of account. 

Certificates of deposit, or CDs, are another type of savings account that sometimes offer even higher interest rates. The catch is that you’ll have to lock away your money for months or even years, and if you need to access that money in the meantime, you’ll have to pay a penalty. 

CDs, unlike regular savings accounts, don’t have variable interest rates. That means that if you open a one-year CD, for example, you lock in the same APY for the entire term. This can be a benefit if rates are expected to decrease in the future, which may happen toward the end of 2025.

If you want to earn a high APY and can afford to leave a certain amount of money untouched for the length of a CD term, you should consider opening a CD.

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